RISK MANAGEMENT. Harald Wagner PhD, PE
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1 WATER RESOURCES & HYDROPOWER DEVELOPMENT IN ASIA TRAINING COURSE ON CONTRACT MANAGEMENT VIENTIANE, LAO PDR February 28-29, 2016 GUEST LECTURE RISK MANAGEMENT Principles in Hydropower Tunnelling Harald Wagner PhD, PE Consulting Engineer TUNNEL CONSULTANT & ITA EXCO EXPERT 1
2 CONTENT OUTLINE 1. Risk - Method Choice 2. Selected Excavation Methods 3. Challenges Design, Construction, Contratring 4. Contracting Principles & Efficiency 5. Risk Mitigation / Management Strategy 6. Contracting - Conventional & Advanced 7. Preconstruction 8. Risk Performance 9. Construction Trends 10. Conclusions 2
3 1. Risk Influencies & Method Choice Governing Influencies geological and hydrological conditions, cross-section and length of continuous tunnel, local experience and time/cost considerations (what is the value of time in the project), limits of environmental impact plus others factors. Excavation Methods Mechanical drilling/cutting Cut-and-cover Drill and blast Open & Shielded TBM s (Tunnel Boring Machines) New Austrian Tunnelling Method (NATM) Immersed Tunnels Special Methods (Tunnel jacking, etc.) 3
4 Bored Tunnel Procedure Probe Drilling (if necessary) Grouting (if necessary) Excavation (mechanical or blasting) Initial Support Installation Muck Transportation Lining or Coating/Sealing Draining/Cleaning Ventilation 4
5 Contract & Risk Combined Management Tunnelling - Art of dealing with Geologic Uncertainties. Hydro Tunnel Designer decide project future in early project stage. Designer manages Tunnel Construction. Choice of Design and Contract Type is governing success in construction. Contract & Risk Management for both Conventional and Mechanized Tunnelling shall follow State of Art of Contracting. 5
6 Elements in Design & Construction Evaluation/classification of ground conditions and particular project requirements Design subdivisions in stages, following the project and construction development Framework for a range of potential applications Construction Methods suitable for standard plant, equipment and material Risk Management Plan (RMP) in context with Geotechnical Baseline Report (GBR) Flexible Contract Models for fair remuneration. 6
7 2. Selected Excavation Methods Excavation using Open gripper TBM in hard rock Excavation using Double Shield TBM vs. DBM Advance Rates & Rock Classes Conventional Tunnelling Full face DBM Excavation 7
8 CASE HISTORY TBM ANIMATION Hard Rock TBM (Manufacturer - Herrenknecht) 5 min Movie 8
9 Construction Risk Impacts Impacts due to Excavation Impacts due to Muck/Debris disposal Impacts due to Equipment Impacts of Indoor & Air Quality Impact on Water Quality Impact on Health & Safety Perceptions Damage on structures Reduction in discharge of resources Reduction in productivity due to dust MONITORING OF NOISE & VIBRATION 9
10 3. Challenges of Design during construction Approval of Design Appropriate Geomechanical Model Calculation & Simulation Definition of Threshold Values Interpretation of Monitoring Data Design of Payment Lines and Geologic Overbreak 10
11 4. Challenges of Construction Construction approval regarding Change of excavation direction Increase of bench height Increase of Progress Rate Change of Blasting Scheme Construction Management Quality Control Decision making Contingency Plans 11
12 Risk Controlled Progress in Rock (TBM) 12
13 5. Challenges in Contracting o Target on contractual Fair Balance between Quality, Schedule and Costs! o Have full disclosed Geotechnical Baselines and independent Auditing of Control Parameters for Owners! o Agree on Risk Sharing and Risk Management, implemented into contract before signing! o Avoid Shortcomings in Engineering (Design and Construction) as this might lead to Collapses! o Main Challenge - Spend Time on Contracting! 13
14 6. Contracting RMP Principles RMP = OBSERVATIONAL METHOD + FLEXIBLE APPROACH + PAT Efficient Contracting Risk - Ownership and Management Conventional Bidding vs. Strategic Partnering EPC vs. Traditional Contracting Approaches for Project Risks Alleviation Eligibility and Prequalification PAT = PREDICTION ANALYSIS & THRESHOLHD RMP = RISK MANAGEMENT PLAN Training and Capacity Building 14
15 7. Contracting with Efficiency Concepts shall reflect Views of Stakeholders, including government, developers, consultants, contractors, manufacturers, financial institutions and NGOs. Best Practices are sharing issues including use of standard bidding documents. EPC vs. Traditional Contracting, Capacity Building, Flexibility of Standard Procurement Rules for efficient Contracting and Risk Sharing Mechanisms. 15
16 8. Risk Mitigation / Management Strategy 16
17 Optimized Risk Reduction 17
18 9. Conventional vs. Advanced Contracting EPC contracts require more Geotechnical Information at the time of bidding than is normally available. This puts pressure on Qualified Designers to get Concept Design as accurate as possible at bid stage. Design based on Insufficient site investigations may result in delays because more site investigations will be requested. Underground uncertainties are the most significant risks on hydropower tunnel contracts. Within an EPC Contract, such uncertainties could be controlled and managed by price reopeners and extensions of time based on the Geotechnical Baseline Report. 18
19 10. Preconstruction Risk Sharing For designers and manufacturers, EPC can mean taking Joint Risks (excluding geological risk) with contractor. Contractors and suppliers do not like carrying Design Risk that they cannot control. Designers and E&M suppliers are unwilling to share risk having only a small share of contract value. 19
20 11. Risk Responsibility The party who owns a Risk, will pay for it if it materializes. Risks should be owned by the party with the best ability to control the outcome. A Responsibility Matrix should be included in the contract to clarify which parties are responsible for which risks. The Austrian System involves a clear risk sharing / risk allocation model. The geologic and hydrologic risk is with the client. The geotechnical behaviour risk is with the contractor. 20
21 Assessing continuous Vulnerability and Risk 21
22 Innovations - Contract Elements Technological Reasons for performance and risk of TBM s and CTM s, Reasons justifying sole use of TBM s or combined use of TBM/CTM, RMP with Mitigation Measures for improving of TBM s and/or CTM s, Contractual Provisions to support actual TBM & DBM Tunnelling, Technological Provisions to support future TBM/CTM Tunnelling. 22
23 12. Performance Factors 23
24 13. Construction Qualifying In Construction Practice, Pre-qualification Process ensures the field is restricted to a limited number of well-qualified competitors. In deciding whether to invest in the cost of bidding, a contractor / supplier will consider Probability of Success and likely revenue. Pre-qualification shall take place in stages, with Shortlisted Companies, competitive Dialogue during Negotiation, evaluation criteria, and possibly reimbursement of expenses to unselected firms. 24
25 Prequalification & Risk Management Hydropower Tunnels are specific to challenging sites. This shall be reflected in both design and prequalification criteria. There should be international competitive bidding for Advisors, Independent Checking Engineers and Consultants. ToR should include Risk Management experience, Team compatibility and intellectual quality. 25
26 14. Contracting Trends Lessons learned in design and in construction show, Geotechnical Baseline Report (GBR) and Risk Management Plan (RMP) shall be part of any contract. Contracting trends show that project owners tend to shift the Geotechnical Risk of adverse geology to the contractor. 26
27 Risk Coverage EPC (Engineering Procurement) Tunnel Contracts require more geotechnical investigations and related expenses than conventional contracts GBR & RMP are helpful tools for owners and contractors during project development in Hydropower Tunnelling at challenging sites. Contracting, in particular choices for contract modelling as well as for tunnelling technology, should be decided upon viewing the best Risk Coverage. 27
28 CASE HISTORY - MALAYSIAN WATER TUNNEL Hard Rock TBM (Manufacturer - ROBBINS) 5 min Movie 28
29 15. Conclusions Tunnelling needs Technology & Contract Planning Reliable Information is needed to achieve efficient Tunnel Construction Geological & Geotechnical Baselines, Risk Assessment Construction Options. e.g. TBM, Drill & Blast, etc. Safety in planning & during implementation includes Capacity Building, and Real-time Monitoring Programs 29
30 Tunnels Symbols of Civilization like Churches, Temples. Your Attention is appreciated! 30
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